Bargaining and regulation with asymmetric information about demand and supply

Daniel F. Spulber*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

17 Scopus citations

Abstract

Rate regulation is studied as a bargaining process in which consumers and the firm negotiate output and payments under asymmetric information. The feasible set of transactions given incentive compatibility and individual rationality constraints is characterized. The set of interim incentive efficient mechanisms for the direct revelation game is also characterized. Sufficient conditions are given for efficient mechanisms to be full information efficient. Efficient mechanisms are identified which correspond to nonlinear monopoly pricing, monosony compensation schedules, and the Baron-Myerson regulation model.

Original languageEnglish (US)
Pages (from-to)251-268
Number of pages18
JournalJournal of Economic Theory
Volume44
Issue number2
DOIs
StatePublished - Apr 1988

ASJC Scopus subject areas

  • Economics and Econometrics

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